Posted by silentpadna on 4/19/2011 3:36:00 PM (view original):
We should stop with "corporate welfare" euphemism. What you really mean is taxing corporations to max extent you can. Welfare comes in the form of government assistance in exchange for nothing. It's essentially the social safety net.
"Corporate welfare" as it is commonly mis-used deals with the reduction of taxes to a corporation in exchange for some sort of benefit. Government doesn't give corporations money in the context you describe. They collect less (or in some cases nothing) in exchange for something like a labor provider so that they have a deeper tax base.
Your goal is have government take more money from what the revenues of corporations. It's fine that you think that would be a good thing. But you ought to be clear about what it is you're espousing. It's easy to go after profit and more power to your cause. But the more you tax my employer, the less there is to employ someone to help me, the less there is for my employer to pay me, and/or the more it costs me to obtain their goods or services.
My employer doesn't keep that money in special "extra cash for taxes" safe all ready to pull out and give to someone else for their pet projects. They figure out their tax burden in their business plan. And they make decisions based on maintaining a required rate of return on their work or investment. If their costs go up (including their taxes or any other cost), a decision has to be made:
1. Pass along the cost to their customers. Increasing the cost of the product to cover means that who pays the tax increase? That's right, the consumer does.
2. Reduce cost of doing business in other areas, like labor. Someone loses a job or doesn't get the raise they earned. Who pays the tax increase? Not the rich guy...it's the consumer or the employee(s).
3. Decide that the reduced margin does not make the risk of doing business worth it, so close down and go into business doing something else. Who pays the tax then?
This corporate tax stuff is nonsense. It's all passed along to the consumer. Wealth is always created by risk return. If the return isn't good enough, less risk is taken, less wealth is created, less taxes are collected.
So what's the real goal here?
On one hand, you're correct. Welfare is a bad choice of words because that would indicate that there was financial need. Most of these subsidies go to large multi-billion dollar corporations so I guess the welfare definition excludes those types of handouts.
On the other hand, you're incorrect. Welfare is not a program that relies on return. But if you want to throw that in there, then we absolutely do get a return on social welfare. Money given to welfare recipients returns to our economic system when it is spent. Tax dollars come back into the system through sales taxes, fuel taxes etc. When a large company pays no taxes and then receives subsidies from the federal government and then invests them in China, that doesn't seem like much of a fair return for the American people. When a large company hides money offshore to avoid paying taxes while we fund the infrastructure they use or go to war in the middle east to secure the oil they use and exploit for profit overseas, I fail to find the return on investment from the American people.
But this is what the new "free market" looks like.